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MGM Mirage (NYSE: MGM)

The Casino Operators have had a precipitous fall along with
the rest of the market during the month of October. Les Vegas Sands has fallen
near 40% while MGM Mirage has taken a fall from $30 a share down to $12 a share
today. Look for more weakness as gambling is not in the cards for American
consumers struck will dismal economic outlooks.

A Number of Issues

First the cost of oil was keeping
numbers of gamblers from visiting Las
Vegas. Then the Chinese decided there were too many countrymen
and women visiting Macau. Now a global credit
crunch and subsequent equity collapse will prevent dollars from being gambled
at casinos world-wide.

Fundamentally

Fundamentally, I feel MGM Mirage is
the weakest of the big Casino Operators. Las Vegas Sands (NYSE: LVS) is in the
middle ground with Wynn Resorts (Nasdaq: WYNN) operating their properties for
the most profit. MGM is experiencing a revenue decline of 3% for the year with
earnings falling 30% for the same period compare to last year. The company has
missed their previous three earnings estimates and seen analysts reduce current
quarter earnings expectations from 41 cents a share down to 34 cents a share.

The Trade

With
some protection in some off-setting Call options you could get short the stock
of MGM Mirage. Foreign investment from Dubia could lead to a spike in the price
of the stock which is why the protection is needed. I am also looking for a
rebound in the overall market with a couple of solid earnings announcements and
a few positive government reports changing sentiment.